Early this morning, November 25, Flinders Mines announced that Magnitogorsk Metallurgical Combine (MMK), owned by Victor Rashnikov, has signed a full takeover offer, proposing to buy all 1.8 billion Flinders Mines shares (including options) on issue at 30 Australian cents. This values the company at A$546.3 million (US$530 million) - a premium of 82% to the share price and market capitalization of the company on November 22, before the offer was announced; and at double the value of Flinders Mines three months ago. The MMK offer will also provide $10 million for the share options claimed by Flinders Mines managers who commissioned the Citi banking group in September to look for candidates to buy them out. The story first appeared here.

There has been no MMK announcement in Moscow. Company spokesmen did not respond to the question of why MMK has decided to buy the Australian mining asset, with an estimated capital expenditure of more than $1 billion required to bring it into production in at least three years' time. According to the MMK press office, the company "will not comment on the Australian bid at all."

A report to Alfa Bank clients today by Alfa steel analyst Barry Ehrlich warned that "any large-scale acquisitions with long-horizon returns… is likely to be taken negatively by investors in the current market environment. MMK had about $400m of cash on the balance sheet as of the end of 1H11, and taking into account the company's recent $100m loan agreement there will be no problem for raising funds for the deal. The acquisition will also negatively affect MMK's current EV/EBITDA multiple, as consolidated net debt will increase by $0.5bn." MMK's current and long-term liabilities amount to $7.4 billion, and they have been rising sharply this year.

MMK's share price fell 3% in trading in Moscow on Thursday, on the eve of the Australian Stock Exchange disclosure.